Plans for a super group of oil producing countries could be in place by year-end as Opec works to institutionalise the ongoing collaboration between 24 member and non-member nations that has helped crude prices to recover, said a report.

 

Suhail Al Mazrouei, the Minister of Energy and Industry of the UAE, which currently holds the Opec presidency, said that a draft framework for a long-term alliance will be finalised in 2018, reported The National.

 

"The aim is together with the secretary general [of Opec, Mohammad Barkindo], to put together a draft agreement for this group (of 24) to stay together for a longer time," said Al Mazrouei in an interview to the UAE daily.

 

Al Mazrouei has some hope that the draft framework could even be endorsed and signed by all 24 countries before the end of the year.

 

Optimism is running high that there is now a strong base on which to make the collaboration with non-Opec members a more permanent fixture of energy markets, said the report. 

 

The Saudi oil minister Khalid Al Falih said last month that the kingdom’s energy alliance with Russia will continue for “decades and generations” and on Wednesday, there was news of plans for joint investments by Saudi and Russia. 

 

Al Mazrouei said Opec was encouraging its 14 members to build oil capacity buffers to temper any wild upswings in price as a result of a weakening dollar this year.

 

"We are incentivising all the group members to have some buffers. That buffer is [to assure] that if you have a surge [in demand] or issue in one of the countries you can replace that in the market and achieve a short and medium-term re-balance of the market," said the minister in the interview when asked about the potential downsides of a weak dollar on global prices.

 

The US dollar is currently trading at its lowest level in more than three years having lost two and a half per cent of its value against other currencies this year, pushing up the price of commodities including gold. 

 

Experts, including Mark Mobius of Franklin Templeton, are betting on a subdued dollar to push the price of oil to a high of $100 a barrel by next year.